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A UK taxpayer who was receiving 5% withdrawals from offshore life assurance bonds has died. Potential income tax liabilities will depend upon who is entitled to the policy proceeds and whether a trust is in existence
A client of mine died recently. For some years he had been receiving 5% withdrawals from some life assurance investment bonds. These were issued by companies in Luxembourg and the Isle of Man.
From the information that I have received it appears that substantial gains have arisen on these policies at death and no UK tax has been paid or treated as paid. I have several questions and should be grateful if readers can help.
First is there tax payable on death?
Second does it make any difference if the policies are written under trust so that the proceeds at death are paid directly to other beneficiaries? The trustees on one of the policies are shown as the late client’s financial advisers.
Third who is responsible for any tax liability? If the policy is in trust is payment due from the estate or...
